Somali piracy costing world economy an estimated US$18 billion

Somali pirates aboard a captured ship off the coast of Somalia.

Somalian piracy is said to be costing the world economy an estimated US$18 billion a year despite a fall since 2012 in the number of attacks due to tougher security aboard ships and increased Western naval patrols, a report released by the World Bank says.

The report says ending Somali piracy requires a shift from reliance on security at sea to targeting those on land who enable the lucrative business to thrive. Pirates now operate far beyond Somalia’s waters, disrupting shipping on global routes in the Indian Ocean and into the Red Sea. Since the first reported hijacking in 2005, 149 ships have been seized, raising total ransoms of $315 million-$385 million.

That is a fraction of the amount the World Bank in its 218-page report estimates it costs the world economy from distortions to trade prompted by piracy. Other bodies give lower estimates. But the costs of naval operations, guards on ships, higher insurance and other factors run into billions of dollars.

Talk among donors of offering alternative livelihoods to pirates have had little impact given that Somalia’s government has limited control over the country and a pirate’s booty is far higher than other work. One expert said a pirate who can earn $5,000 in a night’s work capturing a ship will not be tempted by fishing classes giving him skills that may earn just a few dollars a day. “Somalia cannot buy its way out of piracy; nor can the international community rely solely on its law enforcement agencies to defeat pirates, whether at sea or on land,” the World Bank said in its study.

Pirates rely on support onshore to conduct negotiations and to secure locations from where they can operate. “In turn, politically powerful figures capture large portions of the profits associated with piracy,” the report said. “Any solution therefore will involve forging a political contract with local stakeholders — a shift in attention, in other words, from the perpetrators to the enablers of piracy.” It said the international community and Somali government needed to tailor development assistance and security initiatives in locations where pirates operate to win support from the local power brokers and their communities

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